Why "Strong Scatter!" is Actually Mixed Picture For TV

TV networks are crowing about a strong “scatter” market, with TV ad rates running 35% to 40% over last fall. And at first blush it does sound like great news for the likes of CBS, GE’s NBC, Disney’s ABC and Fox. But the full data actually paints a mixed picture.

The good news is that advertisers do want to spend money on TV. The bad news is that supply is lower, because the number of TV viewers is falling: Primetime ratings are down 10% this fall. That’s a problem for the networks which have already promised to deliver a certain number number of viewers during  “upfront” sales last spring, where advertisers traditionally pay a discount in return for locking in ad budgets.

Further reducing inventory is the networks’ switch to a new commercial ratings standard known as “C3”, which is designed to count how many people are watching ads, not just shows (That data comes from a new Nielsen services). Channel surf during a commercial break of CSI, for instance, and it will cost CBS money: “Advertisers would rather have 9 million watching their commercials rather than 10 million watching a TV program” network head Les Moonves has noted.
Meanwhile some marketers who aren’t reaching the audiences they’ve been promised are getting refunds. But rather than give the advertisers more commercial time via “make goods” the networks are giving them their money back — and offering to sell them scatter inventory, at a higher price then their May guarantees. That’s a virtuous cycle for the networks, and a lousy one for marketers.

Two more factors pushing up pricing:

• Advertisers are pushing to buy their time in Q4 in the event a writer’s strike drags into January and starts to force popular shows into repeats. And some inventory that advertisers expected to see this year may be temporarily disappearing anyway. Fox, for instance, will hold off airing new episodes of “24” until the strike is resolved, because it doesn’t want to have to stop its season midway through.

• A new schedule for the 2008 primary season, which has pushed up presidential primaries for big media market states like California, New Jersey, Illinois, Florida and New York to January and early February, which means Hilary Clinton, Mitt Romney and their competitors are snapping up time now.

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.